General Accident reported lousy first quarter results for 2015, with profit of $26 million and followed that up with even worse figures for the June quarter, just $457,000, and $26.6 million for the first half of 2015, compared with $88 million and $187 million respectively, in 2014. |
Investors were not pleased with the numbers and marked the stock down to a 52 weeks low of $1.30 from which it has made some recovery to $1.50 where it is now trading on the junior market of the Jamaica Stock Exchange.
“For the first half of the year, gross written premium grew to $3.8 billion, an increase of 10 percent over the same period last year despite a sharp contraction in property rates, operating costs also increased by 8 percent in line with our expectations”, management said in their report accompanying the results.
The report when on to state, “Nevertheless, claims charges saw a significant increase by 30 percent to $413 million from $316 and from $169 million for the June 2014 quarter to $228 million in 2015. This sharp increase in claims negatively impacted both our loss ratio and combined ratio which worsened from 86 percent (2014) to 106 percent for comparable periods, respectively”.
The company reported an underwriting loss of $59 million for the half year versus a surplus of $69 million in 2014 and for the Jun e quarter, a loss of $45.6 million compared to a surplus of $20 million.
Investment| Investments delivered reduced income for the first half of 2015 with $94 million earned, below the $125 million generated in 2014 and for the June quarter $50 million versus $68 million in 2014.
“Over short periods of time, our loss ratios may experience significant volatility. Nevertheless, we remain confident that the consistent application of General Accident’s standards and practices will continue to produce underwriting profits over the long-term. As a result, we expect our performance in the second half of the year to improve significantly” Paul Scott, Chairman and Sharon Donaldson, Managing Director reported to shareholders.
Looking forward, investment income could be under threat with lower inflation and interest rates locally and less likelihood of robust gain in the forex market. It will take good management of the various resources to grow income and profits going forward beyond 2015.
Earnings per share for the six months, came out at just 3 cents, down from 18 cents last year.